Warner v. Godfrey

Me. Justice White, after making the foregoing statement, delivered the opinion of the court. The main asserted badges of fraud upon which the complainant based her contention that the conveyance by Dutton to Richardson on April 13, 1896, should be treated, so far as the complainant was concerned, as a nullity, were: 1. The gross inadequacy of a consideration ; 2. A prior agency of the firm of B. H. Warner & Co., for the sale of the lots on behalf of the complainant; 3. The haste with which the negotiations for the sale were had and the sale was completed and, 4. The execution of title to Richardson for the benefit of Warner and Wine and the concealment of the interest of the last-named defendants in the purchase. *375 To sustain and disprove these contentions voluminous evidence was introduced, which was elaborately and carefully reviewed in the opinions delivered by the courts below. Both the trial and appellate court concurred in holding that the proof absolutely vindicated the defendants from the charges of wrongdoing made against them and clearly established the want of merit in the' contentions. As no appeal was taken by the. complainant from the first decree of the Court' of Appeals, and as the'relief asked by the last,amendment to the bill in effect abandoned the claim that the defendants had' committed a fraud upon the complainant, by basing the claim for relief solely upon the hypothesis of a constructive fraud having been practiced upon Dirtton, the entire want of foundation for the charges of wrongdoing urgéd against the defendants and upon which the long litigation proceeded may be taken as conclusively established. Whatever may be said.of the failure of Richardson in his answer to the original bill to fully and fairly disclose the actual transaction, certainly his not doing so did not iong mislead the complainant or conceal from her the real facts. There is no question possible on this subject, since the complainant testified that shortly after the filing of the answer of Richardson to the original bill, statements of the defendant Warner made to the attorney of the complainant in the city of New York, disclosing the actual transaction, were communicated to her, and it also appears that the attorney for the defendants, in company with the defendant Wine, called upon the attorney of the complainant in the city of" Washington and stated the facts of the transaction to him.' With full knowledge, then, of the facts, and because of such knowledge, the amended and supplemental bill was filed making Warner and Wrine defendants as-the real purchasers. ’ The closest inspection of the bill, as originally filed or as amended, discloses no averment which can be construed as predicating relief upon the theory that Warner and Wine had practiced a constructive fraud upon Dutton by purchasing, without his knowledge and consent, property which had been placed by him in the hands of the firm of B. H. Warner & Co, for sale. *376 On the contrary, the sole ground of relief was the claim that Warner and Wine had in effect conspired with Dutton to defraud the complainant, and because thereof the complainant was entitled to recover the property from the said defendants without in anywise reimbursing them for their expenditures in the matter. The answer of Warner and Wine, whilst conceding that they were the real purchasers, took issue upon the charges of wrong and fraud alleged against them. Looking into the record, we repeat, nothing is found conveying even an intimation that the parties considered during the proceedings leading up to the joinder of issue and trial which ensued that any issue existed between them than the one made by the pleadings as above stated. Indeed, the record makes clear the fact that both parties, in taking testimony, acted upon the assumption that it was a fact beyond dispute that the firm of B. II. Warner & Oo. at the time of the sale represented the purchasers, Warner and Wine, and not the seller, Dutton. Thus, in interrogating the witness Hussey, who was at the time ' of the sale the attorney of Dutton, and who was called for the defendants, the following question was asked by counsel for complainant: “ Q. So that at the time of this transaction, in April, 1896, when you agreed with 'Mr. Warner and Mr. Wine to share with them the commission, they to have two thirds, or $500, and you to have one third, or $250, so far as any knowledge that you had on the subject is concerned, you were treating with them as the irolcers of Louis W. Richardson, or whoever the jpurchaser was. Is that so ? “ A. I treated with them as the brokers, and had no interest in who purchased it, so long as the money was paid for it.” Again, in cross-examining the defendant Wine, the following question was asked by the complainant: “ Q. Why did you conceal from Mrs. Mussey, at the time of the purchase of said property in April, 1896, your true connection with the said transaction as purchaser, and hold yourself out as the irolcer or representative of the dinnmy in whose name you tooh title to the property, taking two thirds of the commission for selling the property to yourself ? ” *377 Under tbe circumstances which we have stated, the first question which arises is, Was the Court of Appeals justified, after concluding- every issue actually litigated, in favor, of the defendants, in remanding the case for the purpose of'allowing the complainant to amend the bill in order to assert a new and distinct ground of relief constituting a complete departure from the theory upon which the bill had been framed and upon which the casé had been tried ? And if it was so justified, was it authorized, whilst thus remanding the case for the purpose of allowing the amendment, to provide that the case should not be reopened; in other words, that the amendment could be made and relief granted on it and the defendants be deprived of all opportunity of interposing any defence? Inverting the order in which the questions have been just stated, and under the assumption that the court was justified on the record before it in remanding the case for the purpose of allowing the amendment, we think it was error to reopen the case in order to allow the amendment asserting the new and distinct ground of relief, and at the same time to treat the case as not reopened and the record as closed, the result being to deprive the defendants of all opportunity of a hearing on the new ground of relief permitted to be asserted against them. Hovey v. Elliot, 167 U. S. 409. This conclusion would necessitate, in any event, a reversal, in order that.a trial be had of the new and distinct issue raised by the amendment made under the sanction of the court. This does not, however, relieve us from the necessity of determining whether the court was justified in allowing the amendment, since, if it be found that error was committed in that particular, the appellants would be entitled to a decree of reversal, finally disposing of the controversy. Obviously, the defendants Warner and Wine did not on the trial introduce any evidence to rebut a claim which was not made and which was in substance at war with the theory of the case propounded against them. As observed by the Court of Appeals, if the right existed in Dutton to disaffirm the sale to Kichardson, as having been, in fact, made to-his agents, it would have been incumbent upon Dutton, if he desired such re *378 lief, to have filed “ a timely bill for that purpose.” ' The same obligation necessarily rested upon the complainant of distinctly and promptly asserting a right to relief of like character, if she desired such relief. This, however, was not done. It cannot be said that the complainant failed in this particular because of ignorance on her part of the ground of relief in question, for, as we have already shown, the contract formed a part of the answer of Richardson, and the facts as to Warner and Wine being the real purchasers were known to the complainant at the time of the filing of the amended and supplemental bill. Indeed, certain also it is that every fact in the record from which the Court of Appeals deduced the conclusion that B. H: Warner & Co. were the agents of Dutton is shown to have been known to the complainant before the filing of the amended and supplemental bill. It would be highly inequitable to permit a litigant to press with the greatest pertinacity for years unfounded demands for specific and general relief, however much confidence he may have had in such charges, necessitating large expenditures by the defendants to make a proper defence thereto, and then, after the submission of the cause, when the grounds of relief actually asserted wei’e found to be wholly without merit, to allow averments to be made by way of amendment, constituting a new and substantive ground of relief. This is especially applicable when the facts upon which such amendment rests were known at the incipiency of the litigation and the character of the relief was such as called for promptness in asserting a right thereto. Cogency is added to these considerations when it is borne in mind that if the facts had been embodied in the bill, so as to have allowed issue to be taken thereon, they might have been fully met and disproved, by the defendants. Even if these general equitable considerations might, under exceptional circumstances, be not controlling, they are certainly so when the special facts in the case in hand are borne in mind. Thus it is shown that soon after the filing of the answer of Richardson, when Warner and Wine, through- their attorney's, called the attention of the counsel of complainant to the fact that Warner and Wine were the real purchasers, the defendants named expressed a willingness to *379 treat the purchase by them from Dutton as a loan, and to convey the property to the complainant upon being reimbursed their advances and expenses. This was declined. Again, in open court, in February, 1898, the proposition was distinctly made by counsel for the defendants to treat the transaction as a loan, “and to make conveyance of the property to the com-' plainant on being reimbursed their actual advances.” The response to this proposition was couched in the following language : - , “ Mr. Keane: Counsel for complainant desires to say that an offer of this kind made after the suit has been commenced and after.it has been in litigation- since September, 1896, and after a number of witnesses have been examined upon the part of the complainant, and after the complainant has been obliged to-incur heavy expenses of retaining counsel, and of incurring the further expenses necessarily incident to the preparation of the trial of the case, such a proposition comes too late, and the complainant declines such a proposition for the reasons stated, and for the further reasons that the defendants were not at the time of the alleged purchase of such property Iona fide purchasers thereof, but had knowledge of such facts and circumstances as put them upon inquiry and deprived them of the standing in a court of equity of Iona fide purchasers.” Thus the defendants were distinctly notified that no adjustment was possible, but that the intention was to divest them of the property without reimbursement in whole or in part. The complainant thus having expressly declined to put an end to the litigation, upon the theory thát because of the mala fides of Warner and Wine she’was entitled to an unconditional recovery of the property, she ought not,, in equity, upon the collapse of her efforts to establish fraud and bad faith on the part of the defendants, to be allowed to reform her pleadings. and change her attitude towardg-the defendants in order to ob-. tain that which she had expressly elected' not to seek and had persistently declined to accept.- • The decrees of the Court of Appeals of the District of Columbia should be Reversed, and the cause remanded to that court with instruc *380 tions to reverse the decree of the Supreme Court of the District of Columbia, passed on June 13, 1900, ordering a conveyance to the complainant on compliance with eertavn conditions, and to affirm, and reinstate the decree of the Supreme Court of the District of Columbia, passed January 24, 1899, dismissing the bill and amended bills as against certain of the defendants ; and it is so ordered. Me. Justice HaRlan and Me. Justice Gray did not hear the argument and took no part in the decision of this case.